More stalls remaining empty at coffee shops

For three years, empty stalls have dotted Mr Thomas Foo's three coffee shops in Sims Drive, Geylang and Tampines.

Of his 23 stalls, eight are empty. With new tenants hard to come by, he has decided to operate some of them himself.

"You don't want your coffee shop to be empty or customers won't come," the 62-year-old said.

Empty stalls are becoming an increasingly familiar sight at coffee shops across the island.

Like Mr Foo, many owners The Sunday Times spoke to are taking over their vacant stalls in a bid to keep their businesses afloat.

They blame labour shortage and rising costs for putting people off from running stalls. A lack of heirs willing to take over family businesses and growing competition in the food industry are also not helping.

"Certain stalls have been around for very long, but there's just no one to take over them," said Mr Kenneth Lee, 52, owner of Toa Payoh coffee shop Hai Fong Restaurant. Two of his stallholders have packed up since last December, because of old age and health problems.

The business is also not as lucrative as it once was.

"Prices for ingredients, gas and utilities are all going up," said Mr Tan Chee Fee, 29, supervisor of a mixed- rice stall in Toa Payoh.

Mr Bryen Yap, 32, owner of Balestier Road's Shi Kou Seafood, said: "The worker levy kills. It's expensive to hire workers. Profits are down by 60 per cent to 70 per cent compared with six, seven years ago."

Despite relatively stable rents, tighter foreign worker quotas and higher levies in recent years have also made it tougher to hire cleaners, dish collectors and assistants.

"Stallholders cannot do business because it's hard to find workers," said Mr Hong Poh Hin, 68, chairman of Foochow Coffee Restaurant and Bar Merchants Association.

The service sector's maximum proportion of foreigners in a firm was cut from half to 45 per cent in 2012, then to 40 per cent in 2013.

The levy for hiring an unskilled foreign worker in the same sector also went up from $550 a month in 2013 to $700 last year.

"It's getting worse," said Mr Hong. "A lot of our members are saying that it's hard to rent out stalls, it's hard to hire workers."

Although he noted that coffee shops in busier locations have less trouble, two of nine stalls at his Serangoon outlet have been empty for three years.

"Many stalls cannot cope," said Mr Foo, also the chairman of Kheng Keow Coffee Merchants Restaurant and Bar Owners Association. "You need at least three to four workers for each stall."

With many Singaporeans unwilling to work in coffee shops, Mr Foo estimates that up to nine in 10 owners run stalls to fill the vacant spots.

One such owner is Ms Veron Wong, who operates Peck Hoon Teng Eating House in River Valley Road with her two sisters. They took over a vacant mixed-rice stall last April as they could not lease it out for close to three months.

"No choice... If we leave it empty, we have to fork out money from our own pockets," said Ms Wong.

Like Mr Foo, the sisters are still looking for tenants, partly because collecting rent is more profitable.

Some coffee shops have even been forced to roll down the shutters for good.

The Chang Cheng Mee Wah chain closed one branch in 2013 and three last year. It now has 26 branches here though almost one out of 10 of its kiosks are vacant.

General manager Yap Kim Leong, 47, said: "A lot of shopping malls have many food and beverage outlets now and they are near the MRT and have air-con. Customers are heading there instead."

Across the Kim San Leng chain's 32 branches, six stalls are vacant. Its boss, Mr Hoon Thing Leong, 64, also believes malls and hawker centres are providing stiff competition.

Mr Allan Chia, head of SIM University's Master of Business Administration programme, said consumers might be prizing factors such as food quality and friendly staff over lower prices.

He added that while cafes and restaurants tend to advertise heavily and do more sales promotions, coffee shops usually rely on word of mouth. "This could appear less attractive to today's consumers who are more sophisticated and affluent," he said.

Some foodcourts are also feeling the strain. About 60 stalls, or 8 per cent, of Koufu's units are empty, up from just 3 per cent a year ago.

"It's getting worse," said its founder and managing director Pang Lim, who is slowing down expansion plans. "I'd be lying if I said I'm not worried."

To combat the problem, owners are offering more perks to their tenants. "On a case-by-case basis, we try to offer them rent discounts," said Mr Pang, 60. "We also help promote new stalls by printing fliers and putting up banners for them for free." Mr Foo intends to lower the rent at his Sims Drive stalls. "We let them rent a stall for $1,000 in the first three months. If they can survive, then we will raise it back to the usual $1,500."

He is also considering renovating his outlets. "When it's new, people will feel more comfortable."

But Mr Foo is not entirely confident that these tactics will work if ongoing conditions persist.

"The future of coffee shops does not look good," he said.

Chang Cheng's Mr Yap offered an even bleaker view: "Sooner or later, coffee shops might die out."

yeosamjo@sph.com.sg

This article was first published on Mar 8, 2015.
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